Fair Trade USA, growing and still controversial

fairtrade_6833958232_076a8a019b_bFair Trade is an elegant idea. It’s an attempt to make globalization work for the world’s poor. Those of us in rich countries agree to pay a bit more for whatever it is we are buying — coffee is by far the No. 1 Fair Trade commodity — and, in exchange, we are assured that the farmers and workers at the other end of the supply chain are treated fairly.

If only it were that simple.

Today, in the US, there are no fewer than seven Fair Trade and Fair Trade-like labels. You can find an analysis of them here, if you so choose. The trouble is, they are competing in what remains by any measure a niche market.

Paul Rice, the founder of Fair Trade USA, formerly Transfair, wants to change that. I went to see him last week in Oakland, CA., and wrote about his efforts the other day in a story for Guardian Sustainable Business.

Here’s how my story begins:

Paul Rice, the hard-charging CEO of nonprofit Fair Trade USA, recently toured the Brooklyn headquarters of furniture company West Elm, along with former president Bill Clinton and West Elm’s president, Jim Brett. They were there to celebrate West Elm’s commitment to handcraft products, including the first Fairtrade rugs, which are made in India. “You can have a huge impact on the wage structure in India,” Clinton enthused. “Consumers will buy these. They’re beautiful, besides.”

Fairtrade rugs? What’s next? A lot more than coffee in church basements, it turns out. “We’re talking about furniture, we’re talking about linens, we’re talking about all kinds of things,” says Rice, when we met last week at Fair Trade USA’s offices in Oakland, California. “This move into the manufacturing sector puts us on the threshold of something really big.”

Fair Trade USA is in fast-growth mode. This fall, Patagonia and PACTwill begin selling Fairtrade apparel, made in factories that they say will meet strict environmental and social standards; a small company called Oliberté already sells Fairtrade shoes. Several years ago, Fair Trade USA formed a partnership with a nonprofit startup called Good World Solutions, which has developed mobile technology to connect big companies to the farmers and workers in their supply chains. Meantime, Fair Trade USA is working to certify a bell pepper farm in British Columbia, Canada, expanding the movement beyond its roots in the global south.

This flurry of activity has brought Rice lots of attention, some of it unwelcome. His supporters say that he works tirelessly to expand the impact of fair trade. Critics accuse him of abandoning its principles. As Jonathan Rosenthal, a co-founder of the co-op Equal Exchange, told The Nation: “Paul is not afraid to think and act on a big scale. That’s one of his great gifts. And he’s willing to cut any corners to get there. That, to me, is one of his great faults.”

The disagreements about what constitutes authentic Fair Trade can get pretty arcane pretty quickly. Some people, for example, argue that a chocolate bar should not be labeled Fair Trade unless the chocolate and the sugar were both procured from worker owned co-ops; others say the chocolate alone should do it. Small differences often matter, but in this arena, it seems to me that the priority ought to be growing the idea and practice of Fair Trade, even if compromises must be made along the way. As the movement grows, the bar can be lifted.

If you want to know more, see my 2012 blogpost, A schism over Fair Trade. You can read the rest of my Guardian story here.

GMOs, engineered to make better food

GMO_s_300_300_100With some reluctance, I’m again writing this week about  genetically-modified organisms. My reluctance stems from the fact that on this topic, most people’s minds appear to be made up. People tend to be for ‘em or agin’ em, and for whatever reason, most aren’t open to listening to arguments that challenge their settled view.

My own views are undecided when it comes to the debate over labeling, and the environmental benefits, if any, of GMOs. I’m persuaded that the health risks of eating GMOs, which most Americans do every day, are zero or close to zero although, again, I’m not going to try to change the minds of those who believe otherwise. I’m concerned, finally, about the intellectual property issues surrounding GMOs, although, again, this is complicated because it takes many years and millions of dollars of investment to develop new crops.

Today’s story took root (pun alert!) last winter when I visited the Johnston, Iowa, headquarters of Pioneer, the big seed company owned by DuPont. (It’s near Des Moines, where I moderated a panel on food security at Drake University.) I toured a couple of labs — one for conventional breeding, another for genetic engineering, and chatted with scientists and executives. Pioneer has a fascinating history, by the way: It was founded in 1926 by Henry A. Wallace, who learned about plants as a young boy from his neighbor, George Washington Carver, and went on to become FDR’s secretary of agriculture and vice president.

In any event, while at Pioneer, I heard about genetically-engineered soybeans that have been branded as Plenish. They were designed to make soybean oil that is free of trans fats, and thus healthier than conventional soybean oil. Earlier, I’d heard about a biotech potato under development called Innate, which reduces black spots and thereby means fewer potatoes are wasted. These are among the first biotech crops to promise direct, tangible benefits to consumers, and I decided that was worth a story for Guardian Sustainable Business. Here’s how it begins:

It’s easy to understand why many Americans are unenthusiastic about genetically modified organisms (GMOs). Although supermarket aisles are lined with foods made from biotech crops – most cereals, frozen foods, canned soups, vegetable oils, soft drinks, baby formula, tofu and even milk contain GMOs – consumers have yet to see tangible benefits from GMOs. The biotech industry has been slow to develop food that is healthier, better tasting or longer lasting – to its political detriment.

As Food and Water Watch, a critic of GMOs, has argued, hyperbolically: “The only ones experiencing any benefits from GE crops are the few, massive corporations that are controlling the food system at every step and seeing large profit margins.”

That is about to change.

Pioneer, the big seed company owned by DuPont, is bringing to the market a brand of genetically engineered soybean called Plenish that the company says will produce a healthier oil, free of transfats. Plenish oils have been designed to replace the unhealthy partially hydrogenated oils used to fry food and to keep cookies and crackers, crackers and chips from going stale.

Meantime, the JR Simplot Co, the US’s biggest potato processor, is seeking regulatory approval for genetically engineered potatoes branded as Innate. Simplot says the Innate potatoes will limit black spots from bruising, deliver improved taste and reduce the formation of acrylamide, a naturally occurring chemical that has been identified as a potential carcinogen and is created when potatoes are cooked at high temperatures.

You can think of these new products as GMOs 2.0 – biotech foods designed not just for farmers but for consumers, too. Other examplesinclude the Arctic Apple, which like the Innate potato is engineered not to go brown, and a soybean oil enriched with Omega-3 fatty acids from Monsanto.

You can read the rest of the story here.

Feeding the hungry at Panera Bread

Not by coincidence, I’m blogging today from a Panera Bread cafe near my home in Bethesda, MD. The atmosphere is pleasant, the people are friendly, the wi-fi is reliable and the food is pretty good. (I have a weak spot for the shortbread cookies.) But, as I learned recently, there’s more to this company than meets the eye of a casual visitor.

I wrote a story about Panera Bread this week for Guardian Sustainable Business. The peg was the release of the company’s comprehensive food policy, which is worthwhile — the company is going to try to get rid of all artificial flavorings and colorings in its food by 2016  – but unremarkable in a world where fast-casual competitors like Chipotle and SweetGreen market “food with integrity” or “authentic food.”

What stands out about Panera is its commitment to doing something about hunger in America. Its CEO, Ron Shaich, has spoken eloquently about the problem. Panera has long donated leftover food to homeless shelters and food pantries. Most interestingly, though, Panera through its foundation has opened five “community cafes” where people pay whatever they want. The “community cafes” suggest donations, but there are no fixed prices. The hope is that those with means will pay enough so that those who are poor can eat there, too, and enjoy the full Panera experience–the food, service, atmosphere, maybe even the wi-fi. The concept is working fairly well, although Shaich told me that the cafes still require modest subsidies from the foundation.

Here’s how my story begins:

When you hear the word company, what comes to mind? You might think about business, or perhaps the military (a company of soldiers), the arts (a touring company) or the evening ahead (are you expecting company?). The word company evolved from the Old Frenchcompaignon, literally “one who breaks bread with another”, and before that from the Latin panis, for “bread”. A company, in the broadest sense of the word, is a group of people who join together to do something no one can do alone.

Which is a fitting introduction to the fast-casual restaurant chain Panera Bread – yes, the name comes from that same word panis, Latin for bread – and its founder and CEO, Ron Shaich. An idealist, Shaich pondered a career in politics before opening a tiny cookie shop in Boston in 1980.

Since then, Shaich has consciously tried to build a company that is about more than the bottom line. Today, the 60-year-old CEO guides a chain of 1,800 restaurants that serves more than eight million customers a week and employs more than 80,000 people. Last year, Panera generated $2.3bn in revenues and nearly $200m in profits.

But, as Shaich told me by phone the other day, Panera’s purpose is not to generate revenues or profits. Its purpose is to serve: to serve good food, and to serve its customers, workers and communities. If it does those things well, he says, business results will follow.

“If we don’t touch people, and we don’t make a difference in their lives in a real way, we don’t have a reason to exist,” Shaich says. Companies need to sustain those around them. “If all we’re about is extracting profits from the community, there’s not going to be a community left from which to extract profits.”

You can read the rest of the story here.

Walmart and Target, chemical cops

toxic-beauty1

Health care activists say some cosmetics made by Revlon contain cancer-causing chemicals

Cops of the global village.

That was the headline on a FORTUNE story about globalization that I wrote in 2005. I didn’t care for the headline, but it reflected one of the arguments in the story–that as US companies build global supply chains, they are exporting western health, safety and environmental standards to the global south. Governments in places like Bangladesh, India and China were doing a poor job of protecting the health, safety and human rights of  workers in garment, toy and electronics factories, so US and European brands stepped in. Companies were, in fact, acting like cops–writing laws (they called them codes of conduct) and inspecting factories to make sure they were obeyed. This system, well-intentioned as it was, has not worked very well, as we learned this year with the garment-factory disasters in Bangladesh.

Now something similar is happening right here in the US of A. Walmart and Target, the nation’s biggest and third-biggest retailer (Kroger is No. 2) have adopted policies to regulate so-called “chemicals of concern,” a term used to describe chemicals that are legal despite questions about their impact on human health. This week, Guardian Sustainable Business is running four stories that look at how and why retailers turn into regulators–an introduction by me, stories about Walmart and Target by freelance writer Bill Lascher and a contribution from John Replogle, the CEO of Seventh Generation, which calls “itself the nation’s leading brand of household and personal care products that help protect human health and the environment.”

This is, to put it mildly, a big subject, and so I won’t attempt to summarize our coverage. To give you a sense of the complexity, here is how my story begins:

Last fall, Revlon took fire from activists who alleged that the company’s cosmetics contain toxic chemicals. “Women shouldn’t have to worry about cancer when they apply their makeup,” said Shaunna Thomas of UltraViolet, a women’s group that joined forces with the Breast Cancer Fund and the Campaign for Safe Cosmetics to go after Revlon. “It’s deceptive to wrap yourself in pink and have these chemicals in your products.”

Revlon’s general counsel, Lauren Goldberg, shot back an indignant cease-and-desist letter, calling the charges “false and defamatory” and demanding a retraction. “Revlon has long been … at the forefront of the fight against cancer,” she wrote.

So which is it? Should women throw away their Revlon eyeliner, mascara and lip gloss? Or should they feel good about supporting a company that cares?

In a perfect world, the government would rely on sound science to regulate chemicals in personal and home care products, and consumers could safely assume that there’s no need to worry about the things they buy. No one would ever have to know about chemicals with odd-sounding names like phthalates1,4-dioxane, or triclosan – one of the chemicals that, just this week, the FDA stated it would require soap manufacturers to prove safe.

But in the real world, science can be messy and inconclusive; government regulators can be overwhelmed, indifferent or restricted by industry concerns; nonprofit groups can resort to scare tactics to attract attention or money; and manufacturers can be ignorant, careless or worse about the chemicals they put into their products. As a result of all of this, many everyday items – eyeliner and nail polish, baby bottles, household cleaners, children’s toys, even pizza boxes and antibacterial soaps – have been found, at one time or another, to contain chemicals that could make you sick.

What’s more, even as risks emerge, governments can be excruciatingly slow to respond: several European countries banned lead from interior paints in 1909 because they recognized that lead exposure can cause serious health problems in children, but the US didn’t outlaw lead house paint until the 1970s. Rich Food, Poor Food, a book written by Jayson and Mira Calton earlier this year, lists a number of foods that are banned outside of the US, but permitted within it.

All this helps explain why Walmart and Target are taking matters into their own hands.

Subsequently, Bill Lascher took a closer look–and a critical one–at the policies at both Walmart and Target. His Walmart story is headlined Walmart aims to reduce 10 toxic chemicals–but won’t divulge which and his Target story is headlined Target aims for healthier products under a veil of secrecy. As you see, one reason not to rely on retailers to become de facto regulators is that they have no obligation to explain what they are doing, or why.

I know we’ll try to keep an eye on this story as it unfolds at Guardian Sustainable Business, and we are planning a session on “chemicals of concern” at Fortune Brainstorm Green in May. If you work for a company that’s engaged in the issue, feel free to be in touch.

In a week or two, I’ll have more to say about the Fortune event. In just the past few days, we’ve booked some great speakers, and I’m excited about the program we are developing.

Do you want (GMO) fries with that?

 

imgresIt’s a business cliche–the customer is always right–but unlike most cliches, this one is untrue.

I realized that years ago when I was talking with a top executive at Southwest Airlines. Southwest chooses its employees carefully. They are recruited, in large part, for their good character and values, as well as their friendly personalities and desire to serve. So when an airline passenger tangles with a Southwest gate agent or flight attendant, the assumption at headquarters is that the customer is probably wrong. Those customers who are particularly unpleasant or argumentative when dealing with Southwest are politely told that they will never be permitted to fly on the airline again.

I raise this because on the subject of genetically-engineered potatoes, McDonald’s, in all likelihood, will soon find itself caught in an awkward place–between the worries of some of its customers about GMOs and the desires of an important supplier to improve the health of the potato and reduce food waste. That is the topic of today’s column for Guardian Sustainable Business.

Here’s how it begins:

“Do you want fries with that?” Not if they’re made from genetically engineered potatoes, say activists who oppose GMOs.

The advocacy group Food & Water Watch is asking McDonald’s, the world’s biggest buyer of potatoes, not to source a genetically engineered spud that was developed by its biggest supplier, the J.R. Simplot Co.

“This potato is anything but healthy,” writes Wenonah Hauter, the executive director of Food and Water Watch, in a letter (PDF) to Don Thompson, McDonald’s CEO. Altering the plant’s genes, she writes, could unintentionally affect other characteristics of the potato, “with potentially unforeseen consequences for human health”. The letter has been signed by 102,000 people.

Other NGOs, including Friends of the Earth and the Center for Food Safety, also oppose genetically engineered food. The Consumers Unionwants that food labeled. All of them argue that US government regulation of genetically modified crops is inadequate.

This is a problem for McDonald’s – and for anyone who believes that genetic engineering has the potential to increase crop yields, help solve environmental problems or deliver healthier foods.

The interesting thing about the new potato varieties developed by the J.R. Simplot Co., an Idaho-based potato processing giant, is that they are engineered to deliver consumer and environmental benefits, as my story goes on to explain. They are designed to lower levels of acrylamide, a potential carcinogen. And they reduce black spots from bruising, which means fewer potatoes have to be thrown away. Unlike some other GMO crops, which primarily benefitted farmers (not that there’s anything wrong with that), these will benefit people who choose to eat the fries at Mickey D’s.

The GMO debate is complicated, although rarely is it presented that way. See, for example, this page on the Organic Consumer Assn. website, blasting Monsanto with ridiculous headlines like “Monsanto’s GE Seeds Pushing US Agriculture into Bankruptcy.” That will come as a surprise to USDA, which says that the US agriculture sector will enjoy record high income of  $120 billion this year. But I digress. Few people truly understand the science of biotechnology. I certainly don’t. So if we take sides, we do so based mostly based on the opinions of others who we trust. As my story says, the debate

gets emotional very quickly and often comes down to questions of trust. Here the anti-GMO forces have an advantage. They can position themselves as consumer advocates – public interest groups, if you will. By comparison, the companies that favor GMOs are seen as self-interested and lacking credibility. Government regulators also, generally, don’t inspire trust.

No wonder anti-GMO sentiments seem be growing. It’s easy for NGOs to stir up fear, and the record of government regulators–whether we’re talking about USDA, the FDA or the SEC–doesn’t inspire confidence. We should approach new GMO crops with humility and caution, particularly when considering their environmental impact. Like any technology, genetic engineering comes with risks as well as benefits.

But let’s not forget that Americans eat genetically engineered food every day, with no adverse health effects that can be attributed to GMO foods. There’s a broad consensus among mainstream scientists that the GMO crops now on the market are safe to eat.

Consumers may be fearful of GMOs, but that doesn’t make them right.

 

Will better disclosure help transform business?

accountingWhose sustainability performance is better, PepsiCo or Coca-Cola? Dell or HP? Microsoft or Google? Tracking sustainability metrics isn’t easy, but that hasn’t stopped numerous organizations from trying.

One of the newest and most ambitious efforts comes from the Sustainability Accounting Standards Board (SASB), a non-profit group based in San Francisco,which is trying to set standards for sustainability reporting, much in the way that the Financial Accounting Standards Board (FASB), has done for financial reporting.

I took a look at SASB (it’s pronounced sazz-bee) in my latest story for Guardian Sustainable Business. Here’s how it begins:

In the annual report known as a Form 10-K that is filed with the Securities and Exchange Commission, Coca-Cola outlines a variety of risks to its business, as public companies are required to do.

The global beverage giant, which booked $48bn in revenues in 2012, talks about how water is “a limited resource in many parts of the world, facing unprecedented challenges from over exploitation, increasing pollution, poor management and climate change.” Coca-Cola says that its plastic bottles could be subject to “deposits or certain eco taxes or fees.” And the company worries that growing concern about “the potential health problems associated with obesity and inactive lifestyles represents a significant challenge to our industry.”

PepsiCo also acknowledges the problem of water scarcity in its Form 10-K. But the company doesn’t cite the potential regulation of plastic bottles as a concern. And the word “obesity”does not appear anywhere in its annual filing.

What’s going on here? It’s possible that Coca-Cola is more aware of social and environmental risks than is its arch rival. More likely, the Coke and Pepsi lawyers don’t agree on what constitutes a “material” risk to their business, and thus has to be reported.

If nothing else, the different Form 10-Ks are evidence that the quality of sustainability disclosure varies widely – even though public companies are legally obligated to tell the SEC and investors about the social, political and environmental risks they face. [click to continue...]

Walmart’s index: A real-life toy story

Is My Little Pony sustainable?

Is My Little Pony sustainable?

This is the third in a series of stories about Walmart’s supplier sustainability index. An overview is here, and a story about flour, bread and agriculture is here. Today’s topic: plastic toys and PVC.

Walmart wants to improve the sustainability of plastic toys. The giant retailer isn’t playing around.

The company wants to improve the safety of workers who make the toys. It wants to make sure that manufacturers are taking steps to use fewer so-called “chemicals of concern” in toys. It would like suppliers to deal with any issues raised when kids outgrow Barbie or GI Joe and throw them away. If paper or wood goes into toy packaging, Walmart wants to know whether it is “sourced in accordance with a credible certification system that addresses ecosystem impacts and biodiversity.”

Some critics think Walmart is taking this too far. That’s what this story is about.

Walmart’s supplier sustainability index, which is being rolled out to thousands of suppliers, is the biggest environmental initiative in the company’s history.  It will likely do enormous good–requiring companies that make consumer products to examine their environmental impacts in ways they have never done before. But the index also raises questions about how the world’s largest retailer (2012 revenues: $469 billion) is exercising its market power.

Is Barbie toxic?

Is Barbie toxic?

Consider, as an example, PVC, or polyvinyl chloride plastic, commonly known as vinyl. It’s a widely-used plastic, and it shows up in toys, including such iconic plastic toys as Hasbro’s My Little Pony and Mattel’s Barbie. It can be made soft or rigid, it’s rugged, moldable, low-cost and excellent at holding color.

What, if anything, is wrong with PVCs? That depends on who you ask. [click to continue...]

Walmart’s index: Better than sliced bread?

flourvertical

This is the second in a series of three stories about Walmart’s supplier sustainability index. An overview of the index can be found here. 

Can Walmart change the way wheat is grown in America?

The company is trying to do just that. Here’s how.

Start inside a Walmart store in Laurel, Maryland. On sale here are nearly 40 brands of flour, many more varieties of  bread and countless other products made from wheat, including cookies, cakes, crackers andpancake mix.

In theory, Walmart has influence over every one of those products. The giant retailer (2012 revenues: $469 billion) sells more groceries than any other supermarket chain. Brands like Pepperidge Farm and Arnold and Sara Lee need access to its shelves.

To make agriculture more sustainable, Walmart has begun asking its suppliers probing questions about the grains they use. What percent of your grain is provided by suppliers that track fertilizer use and have goals and a program in place to optimize fertilizer use? What percent of your grain is provided by suppliers that monitor soil fertility and have goals and a program in place to minimize soil degradation and erosion? What about fuel use? What about water? What about pesticides? What about managing biodiversity?

Whew.

For the flour and bread makers, this is new territory.  Most never deal with the farmers who grow their wheat. They buy from middlemen.

“When you run into production agriculture, with thousands of growers, the product is commingled, it’s by definition a commodity,” says Fred Luckey, a retired Bunge executive who is now chairman of Field to Market, a nonprofit group that is working with Walmart.

Now they have to did deep into their supply chains, if they want to stay in the good graces of Bentonville. No company has ever tried anything like this before. [click to continue...]

Walmart’s index: This is big. Really big.

A Walmart with LED lights

A Walmart with LED lights

This is the first of three stories about Walmart’s supplier sustainability index.

Since launching its sustainability program in 2006, Walmart has reduced energy consumption in its stores, installed solar panels on its rooftops, curbed emissions from its trucks and recyled millions of tons of its trash. Now that the world’s biggest retailer has streamlined its own operations, it is turning its attention elsewhere–actually, almost everywhere.

Since last fall, Walmart has rolled out what it calls a supplier sustainability index to thousands of suppliers, asking them pointed questions about their operations and prodding them to better understand and manage their own supply chains.

It’s Walmart’s most ambitious environmental project ever, and if all goes according to plan, it will change the way all kinds of consumer products–clothes, toys, electronics, food and beverages–are made. The typical Walmart stocks 125,000 to 150,000 products (!), and the envirommental and social performance of most of the companies that make them them will soon be rated and ranked in Bentonville.

So Walmart is asking lots of questions of its suppliers. Among them:

How can wheat be grown with less water and fertilizer? How can chemicals of concern be removed from toys? What mining practices were used to extract copper, gold and silver for computers or jewelry? What percentage of your televisions sold last year were Energy Star certified? Do the grapes in a bottle of wine come from a farm with a biodiversity management plan? How much water was needed to produce those polyester pants?

If this sounds like a massive and fiendishly complicated undertaking, well, it is. It has been in the works since 2009, when Walmart unveiled The Sustainability Consortium, a nonprofit coalition led by the University of Arkansas and Arizona State University that was set up to provide scientific research to undergird the effort. Since then, a few other retailers (Tesco, Kroger, Ahold, Best Buy) and dozens of consumer products brands (Coca-Cola, Disney, Kellogg’s, Mars) have signed on to the consortium. [click to continue...]

Verlasso: Farming salmon the right way

salmon“In the fish counter, all the salmon are dead, all the salmon are red, and none of them can tell a story. It’s incumbent on us to tell the story.”

That’s Scott Nichols, the director of Verlasso. Verlasso, a joint venture of DuPont and AquaChile, farms salmon in Patagonia, and seeks to do so in a responsible way. So Scott has a story to tell.

“We feel a tremendous urgency to get this right,” Scott said, when we met recently in Washington. “We have to learn our way into it. We don’t have all the answers, and we may not have all the questions.”

Scott Nichols

Scott Nichols

A PhD. biochemist who studied business at Wharton, Scott, who is 57, never expected to find himself in the business of fish farming. But as he researched new business opportunities for DuPont in the mid-2000s — he had earlier worked on improving the productivity of maize and beans and on Sorona, the company’s plant-based fiber — he got interested in salmon aquaculture. Aquaculture was booming, for obvious reasons: demand for fish is growing, and the supply of wild-caught fish is flat. The problem, was, salmon aquaculture then and now usually relies upon fish feed made in part from forage fish, such as anchovies, herring and sardines. About four pounds of wild-caught feeder fish are typically needed to produce the fish oil to make one pound of salmon, according to Verlasso. So salmon aquaculture, rather than easing pressures on the ocean’s stocks of wild fish, was actually making things worse.

“The system was broken,” Scott said.

Scientists at giant DuPont (2012 revenues: $35 billion) discovered that they could substitute a genetically-engineered yeast for the fish oils, and preserve the [click to continue...]